METALS-Zinc falls to 7-week low on expectations of rising supply

(Updates with closing prices, recasts)
By Peter Hobson
LONDON, Nov 7 (Reuters) - Zinc prices on Wednesday fell to a
seven-week low on expectations that a supply crunch will ease.
Benchmark zinc on the London Metal Exchange (LME)
closed down 1.8 percent at $2,455 a tonne after touching $2,445,
the lowest since Sept. 21.
"Smelter margins in China are picking up and the expectation
is that production is set to trend higher into year-end," said
Deutsche Bank analyst Nick Snowdon.
"There has been a big build in (zinc) concentrate stocks (in
China) in the last quarter or so ... with treatment charges
picking up and prices stabilising there's a clear incentive for
smelters to ramp up output," he said.
Prices of zinc, used to galvanise steel, fell 26 percent
over June-August but have recovered from August's low of $2,283.
China is the biggest producer and consumer of zinc.
ZINC STOCKS: Headline inventories in the LME warehouse
system continue to fall. At 134,750 tonnes they are close to a
10-year low of 131,775 tonnes reached in March.
SPREAD: The premium for cash zinc over the three-month
contract MZN0-3 at $47.50 has eased from highs around $60 in
late October, but signals that shortages of nearby supply
remain.
DEFICIT: The roughly 13.5 million tonne global zinc market
had a deficit of 292,000 tonnes in the first eight months of the
year, the International Lead and Zinc Study Group (ILZSG) said.
DOLLAR: Providing some support to metals prices was the
dollar, which weakened after gains by the Democrats in U.S.
elections cast doubt on further tax cuts. A lower dollar makes
metals cheaper for buyers with other currencies.
CHINA: Despite fears that a U.S.-China trade dispute will
undermine China's economy, exports from the country are expected
to have expanded at a healthy clip in October as businesses
frontal orders before higher U.S. tariffs set in at the turn of
the year, a Reuters poll showed.
YUAN: In a sign that authorities may be stepping up
interventions to keep the yuan from weakening, China's foreign
exchange reserves fell more than expected to an 18-month low in
October.
CHINA ALUMINA: China's exports of aluminium raw material
alumina last month were roughly equal to September's bumper
volumes, the president of Aluminium Corp of China
said.
PRICES: LME copper closed down 0.1 percent at $6,153
a tonne, aluminium finished 1.7 percent higher at
$1,984.50, lead rose 1 percent to $1,927.50, tin
ended unchanged at $19,050 and nickel rose 0.4 percent
to $11,820.
(Additional reporting by Mai Nguyen; Editing by Adrian Croft
and David Evans)